Starting an ETF savings plan properly: selection, costs and common mistakes

The ordering is misleading. The order fee is the only line anyone argues about publicly, and in Europe it is now the smallest — provided you pick the right provider. The other three run quietly in the background every year, and they apply to the whole portfolio rather than just the new instalment.

Worked example 1: what a percentage fee actually costs

Take EUR 300 a month for 20 years at an assumed 6% a year. With no fees at all that compounds to roughly EUR 138,600.

• 1.5% per execution, the classic high-street bank tariff: only EUR 295.50 of each instalment reaches the fund. The final value falls by 1.5% to about EUR 136,530 — a difference of EUR 2,080.
• A flat EUR 1.50 per execution: that is 0.5% of a EUR 300 instalment, so roughly EUR 690 less at the end.
• EUR 0 per execution: the full instalment works for you.

Not catastrophic — but it is free money, and the arithmetic flips on small instalments. EUR 1.50 on a EUR 50 instalment is 3%, not 0.5%.

What the providers currently charge

As of September 2026. Price lists move: Scalable switched gettex to a flat EUR 1.99 per single order on 1 September 2026, and savings-plan executions stay free. DEGIRO has no savings plan in the neobroker sense — you buy whole shares with ordinary orders, which is cheap above roughly EUR 1,500 per trade and awkward at EUR 150 a month. Swissquote is the most expensive row in the table and still the right answer for many Swiss investors, because pillar 3a, bank account and custody sit under one FINMA licence.

An ETF has a net asset value, but you do not buy it at net asset value. You buy it from a market maker who quotes a bid, where he buys, and an offer, where he sells. The gap is his revenue and your cost.

Three things drive the width of that gap: the liquidity of the underlying securities, the time of day, and the venue. A MSCI World tracker often trades at 0.03% to 0.08% during Xetra core hours. The same fund at 22:30 on an off-exchange venue, when the European reference markets are shut and the market maker cannot hedge immediately, is quoted materially wider.

Worked example 2: spread on an instalment versus a lump sum

• Savings plan, EUR 300 a month. Half a 0.04% spread is EUR 0.12 per purchase. Across 240 instalments: about EUR 29. Immaterial.
• Lump sum, EUR 25,000. Half a 0.04% spread is EUR 10. At 0.40% it is EUR 100. One trade, ten times the cost.

The practical rule follows directly. On a monthly instalment the spread is not worth thinking about, and trying to optimise the execution date is wasted effort. On a large lump sum it is the single biggest line of the transaction — so trade during the reference exchange main session, and use a limit order rather than market.

The total expense ratio is accrued daily against fund assets. It is the floor of what the fund costs, not the outcome. What matters is the tracking difference: the actual gap between index return and fund return over a calendar year.

Two effects move that gap:

• Securities lending. Physically replicating funds lend stock and keep part of the fee, which works against the TER.
• Dividend withholding tax. An Irish-domiciled fund can claim the 15% treaty rate on US dividends instead of the 30% statutory US rate. Swap-based ETFs on US indices can avoid US dividend withholding altogether through the structure of the swap. On a US-heavy index that is worth several basis points a year — more than the TER difference between two providers.

Which fund ends up ahead therefore cannot be read off the TER alone, nor off a snapshot in a guide article. We deliberately quote no product figures here: TER and fund size move continuously and are only verifiable against an ISIN and a stated date. The documents that count are the fund's PRIIP KID and the provider's current factsheet — they carry the TER, the fund size, the domicile and the replication method for each individual fund.

On a EUR 100,000 portfolio, a TER difference of eight basis points is exactly EUR 80 a year. Real — but not a reason to swap a very large fund for a small one. Small funds get closed or merged, and in Germany a liquidation is a taxable event that ends your holding period. Above roughly EUR 500m in fund assets that risk is small in practice.

Economically the difference is nil: the accumulating fund reinvests the dividend immediately, and with a distributing fund you do it yourself. Fiscally the difference is substantial, and it depends entirely on where you are tax resident.

Germany

Since the 2018 investment tax reform there is the Vorabpauschale, an advance lump-sum charge on accumulating funds that taxes a minimum return each year even when nothing was paid out. The mechanism:

1. 1Base yield = redemption price at the start of the year × the official base rate × 0.7
2. 2less any distributions actually made during the year
3. 3capped at the actual increase in the unit value over the year
4. 4of which 30% is exempt for equity funds (Teilfreistellung)
5. 5the remainder is taxed at 25%, plus a 5.5% solidarity surcharge on that tax, plus church tax where applicable

The base rate is published by the Federal Ministry of Finance each January and derives from long-dated Bund yields. Check the current figure in that year's ministry circular before you calculate — it changes annually.

A worked example, assuming a base rate of 2.5% and a portfolio worth EUR 50,000 at the start of the year:

• Base yield: 50,000 × 2.5% × 0.7 = EUR 875
• 30% partial exemption: EUR 612.50 remains taxable
• Tax at 26.375% (25% plus solidarity surcharge): about EUR 162
• Annual allowance: EUR 1,000 per person, EUR 2,000 for jointly assessed couples. Anyone who has not used it elsewhere pays nothing in this example.

One practical point: the charge is collected from the settlement account in January of the following year. Keep cash there, or some banks will sell units automatically to cover it.

Switzerland

For private individuals, realised capital gains are not taxed; income is. With an accumulating fund the retained income is still declarable as income even though no cash moved. The Federal Tax Administration publishes the relevant per-ISIN figures in its ICTax register. Swiss distributions also carry 35% withholding tax, reclaimed through the annual return.

Austria

27.5% capital gains tax. What matters is whether the fund is a reporting fund (Meldefonds): only then are deemed distributions reported and taxed correctly. Non-reporting funds are taxed on a flat, materially worse basis. The OeKB maintains the list.

Also check whether your broker withholds tax at all. Trade Republic does so for German taxpayers; DEGIRO does so for nobody. If you invest from Austria or Switzerland through a foreign broker, the declaration is your job.

1. 1Buying three ETFs that hold the same thing. MSCI World plus S&P 500 plus Nasdaq 100 is not diversification; it is the same US technology sector in three wrappers. One global equity fund, optionally topped up with emerging markets, is enough for most portfolios.
2. 2Chasing the TER and ignoring fund size. Eight basis points is not an argument for a fund that gets merged away in three years.
3. 3Pausing the plan in a drawdown. The entire point of a fixed instalment is that it buys more units in weak months. Pausing inverts the mechanism.
4. 4Choosing a broker for the switching bonus. Look at the cost of leaving instead: DEGIRO charges EUR 20 per position for outgoing transfers on the euro schedule, Saxo about EUR 50 per ISIN, while at Trade Republic the transfer is free. Ten positions at the brokers that charge, and the bonus is gone.
5. 5Forgetting the German exemption order. It costs no permanent tax, but it ties up cash until the annual return.
6. 6Buying a currency-hedged share class. Hedging costs the interest-rate differential between the currencies and removes a risk that largely washes out over twenty years in a global equity fund.
7. 7Trying to optimise the execution date. On EUR 300 a month you are arguing over cents. That effort is better spent on the savings rate.

1. 1Pick the index first. A broad global equity index as the core. If you want emerging markets, use an all-country version rather than two funds.
2. 2Compare two or three products on three-year tracking difference, fund size (roughly EUR 500m and up) and domicile — not on TER alone.
3. 3Choose the broker on the savings-plan tariff, not the marketing. Free from EUR 1 with fractional execution is the European market standard, not a favour.
4. 4Check whether the broker withholds tax where you live. If not, plan the declaration before you open the account.
5. 5Set the instalment, automate the transfer, and look at the account no more than quarterly.
6. 6Review once a year: allowance used up? Cash in place for January's advance tax charge? Fund still large enough?

Tax rules and price lists change, sometimes mid-year. Verify every figure here against your provider's current schedule, and take tax questions to a qualified adviser.

This article is general information, not investment advice.